The Surprising Effects of the COVID-19 Pandemic on Baby Boomer owned Small Businesses
This past April, a study published by the Federal Reserve Board attempted to answer the question “How many businesses closed permanently during the pandemic?” Unfortunately, the study could not provide a definitive answer, however, estimates such as “one third” have been publicly shared by officials.
Small businesses owned by baby boomers are of special interest to us at OPARasa. We are a social enterprise with an investment model that honors the legacies of those business owners moving into the next phase of their lives while enabling people in long-term recovery to develop meaningful careers. We performed our own research and came to some surprising conclusions about how the pandemic affected this critical economic segment.
Who are the Baby Boomers?
Baby boomers (sometimes just called “boomers”) are most often defined by the range of years in which they were born, usually from 1946 to 1964. They're currently between 57-75 years old and there are approximately 71.6 million in the U.S as of this writing.
*Photo Credit: Seb [ P34K ] Hamel, Unsplash
Baby boomers were named for a phenomenon known as the “baby boom”. This was a spike in birth rates after World War. Approximately 3.4 million babies were born in 1946, more than ever before in United States history. This trend continued, with an estimated 3 to 4 million babies being born each year from 1946 to 1964. This led to the largest generation in the United States at the time with a population of almost 72.5 million in total. A lot has happened over the course of their lives:
Baby boomers were born into a world of black and white television and now live in the age of Wi-Fi, smartphones, and machine learning. Many of the earliest computer-age innovators are baby boomers, such as Steve Jobs and Bill Gates.
Early in their lives, they witnessed the effects of conflicts such as the Korean War as well as rising tensions in Vietnam. Many served their country in the Vietnam War while some participated in the antiwar movement.
They also grew up during the civil rights movement and were influenced by great civil rights activists.
We won’t presume to describe this entire generation, but there are some general characteristics that tend to be observed in baby boomers by many studies:
They value relationships. They grew up cultivating the value of connecting in very personal ways.
They’re goal oriented. They were raised with the idea of the American dream as their guiding force and definition of success.
They’re resourceful. As described previously, this generation has both witnessed and developed some of the greatest technological advances in history.
Why did they go into business?
Guidant Financial (https://www.guidantfinancial.com) performs an annual survey of approximately 3,000 boomers nationally in small business. Interestingly, in their latest report, only a little over a third have been in business for 10+ years while 37% started their businesses within the last 5 years.
Guidant shared the following regarding the motivations for opening their businesses:
Twenty-eight of survey respondents said their readiness to be their own boss was their biggest motivation for going into business for themselves. It’s the most popular motivation, with a 12 percent increase in the share, year over year.
The second most popular response was a desire to pursue their own passion, at 19 percent.
The third most popular motivation was that an opportunity presented itself, caused by a life experience like divorce.
Fourth was dissatisfaction with corporate America, at 14 percent.
The fifth most popular business motivation was going into business because they weren’t ready to retire.
*From Boomers in Business – 2020 Trends, A look at baby boomer-owned businesses in 2020 by Guidant Financial
Happiness and Profitability before COVID
According to the report, published prior to the height of the COVID-19 pandemic in the U.S., 77% of respondents reported that they were happy being in business as shown below.
Interestingly, 78% also said that their business was currently profitable. An interesting, potential correlation.
2021 Trends for Baby Boomers and Small Business
While the latest 2021 data continues to be collected, there are several tailwinds already reported. Small Business Labs (www.smallbizlabs.com) recently published an article based upon research from Barlow Research Associates (https://www.barlowresearch.com) on the current attitudes of Baby boomers owning small businesses:
A majority of older owners (60%) plan to continue operating their businesses despite having bankruptcy concerns. The two primary reasons are: Not wanting to quit their businesses or not having the financial resources to retire.
40% shared that they are considering closing their businesses permanently (or presumably attempting to sell their businesses) for 3 primary reasons:
The amount of time and energy to rebuild their businesses, given their age and circumstances.
The need for additional financial investments to reinvigorate their businesses post pandemic would not be prudent given their life stage.
The exhaustion of navigating the pandemic associated with pivoting to digital business models, fluid compliance requirements by federal and local authorities, and the trauma of laying off employees.
Contextually speaking, prior to the pandemic, the U.S.Census Bureau reported that boomers owned 2.34 million small businesses in the United States and employed more than 25 million people. The impact of changes to a large portion of these businesses will be significant for a portion of the U.S. population.
Surprisingly, despite the challenges boomer small business owners faced, a majority of them are staying true to the spirit of their generation and have reported planning to continue in their businesses. Conversely, a large minority are considering a change as a result of the pandemic.
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This article was co-authored by Stephen Deason and Tony Fatouros.
Stephen Deason is founder and Chief Executive Officer of The OPARASA Group, a Social Enterprise helping people build worth in Recovery. He is the previous CEO of GRYYT, a Socially Conscious MarTech firm and has a history of applying his compassionate and effective management style to a diverse employee demographic. Stephen is also an active volunteer who sits on four nonprofit boards and the advisory boards of two startup technology and telecommunications firms.
Tony Fatouros serves on the OPARASA Advisory Board as an Executive Consultant. Tony has held both leadership and consulting roles within organizations ranging from startups to global Fortune 100 companies in the areas of Digital Transformation, Organizational Change Management, and Program & Project Management.